(Adds central bank statement, arrests)
KHARTOUM Dec 25 Sudan's central bank banned
unofficial currency dealing after the Sudanese pound fell to a
record low on the black market on Tuesday, a drop likely to add
pressure on the government to raise state salaries.
Traders said the drop was the result of importers struggling
to obtain foreign hard currency. The central bank blamed dealers
who it said were linking the pound rate to gold prices.
"It is almost impossible to get dollars in Khartoum and it
is getting worse," said one black market trader. "The mood is
There is little foreign or official trading in the Sudanese
pound and the black market rate is an indicator of the mood of
the business community and ordinary people tired by years of
economic crises and ethnic conflict.
Sudan has not seen an Arab Spring uprising like its
neighbours Egypt and Libya but the government faces dissent over
spiralling inflation caused by the loss of three quarters of its
oil production when South Sudan seceded in July 2011.
Oil was not only the main source for state revenues but also
for dollars needed to fund imports as Sudan produces little.
Annual inflation hit 46.5 percent in November, triple the 15
percent in June 2011, the last data before southern secession.
The black market rate is watched by foreign firms which sell
products in pounds but struggle to convert profits into dollars.
Among those companies are mobile service providers Zain
and MTN and Gulf banks such as Dubai Islamic
On Tuesday, a dollar bought up to 7.1 pounds, breaching 7
for the first time. Last week, the rate on the parallel market,
which has become the benchmark, was around 6.9. At the time of
secession it was 3.3.
By contrast, the official rate stands at around 4.4
but has little value as the central bank and commercial lenders
are unable to produce as many dollars through official channels
as importers need, according to traders.
To offset the loss of oil, the government has been boosting
gold exports and trying to buy up locally-produced gold - often
above the market price, according to industry sources, a
practice that fuels inflation.
Central bank Deputy Governor Mahmoud el-Din Badr told the
state-linked Sudanese Media Center (SMC) website that the bank
had banned unofficial currency trading and would report anyone
flouting the ban to the authorities.
Two black market traders told Reuters that the authorities
had launched the crackdown and arrested several dealers. But
traders doubted the central bank would be able to enforce the
ban as it would not solve dollar scarcity.
The opposition has been unable to mobilize mass protests
against veteran President Omar Hassan al-Bashir but the pound's
slide has sparked calls even from inside his ruling party to
increase salaries in the public sector, where most people work.
Analysts say such a move would further fuel inflation and
weaken the pound as the central bank would have to print yet
Trade unions also called on the government to increase the
minimum salary, state news agency SUNA said.
South Sudan was supposed to pay Khartoum to pipe crude
exports through Sudan, but the new nation shut down its entire
350,000-barrel-per-day output in January in a row over fees.
The two signed a series of deals in September to restart
exports, but disagreements over how to implement them have
delayed the resumption.
The two countries held talks this month but have yet to
agree on how to set up a border security zone, a move needed to
restart the oil exports. More talks are due in mid-January.
(Reporting by Khalid Abdelaziz; Writing by Ulf Laessing;
Editing by Tom Pfeiffer)